T-Mobile US beat expectations on customer additions for the second quarter of 2022 and has raised its expectations for the year in a number of areas, continuing a strong showing while AT&T and Verizon pull back on their guidance.
T-Mo landed postpaid net customer additions of 1.7 million, its best-ever Q2 number, according to the company’s second-quarter report. Postpaid phone net adds were 723,000, and T-Mo didn’t miss the chance to point out that its postpaid phone churn of 0.8% was lower than Verizon’s for the first time ever. In addition, the company brought on 560,000 net new home internet customers.
However, $1.9 billion in expenses including merger-related costs, wireline impairment costs and several hundred million dollars related to a data breach settlement meant that profits took a hit, and the carrier reported a net loss of $108 million for the quarter. Despite the drop in profits, investors sent the operator’s shares up around 4% in midday trading.
While Verizon has lowered its revenue outlook and AT&T pulled back on its expectations for cash flow due to higher than expected costs, T-Mobile raised its guidance on a number of its anticipated figures for the full year, including postpaid customer net additions and merger-related synergies. T-Mobile US increased its guidance on postpaid net customer additions for the year from 5.3-5.8 million to 6.0-6.3 million. It also raised its expectations on merger synergies, saying that it expects to achieve between $5.4-$5.6 billion in synergies this year rather than its previous target of $5.2-$5.4 billion. In terms of network integration, the carrier said that as of the end of the second quarter, it has finished nearly two-thirds of the 35,000 sites that it has targeted for decommissioning, and that it will “substantially complete” its site decommissioning work by the end of the third quarter.
In addition, the company raised its expected figures on purchases of property and equipment for its 5G build-out, saying that it plans to spend $13.5 billion to $13.7 billion (up from $13.2 to $13.5 billion).
The company saw a significant uptick in its prepaid customer base, reporting net adds of 146,000 for the quarter — up from 76,000 in the year-ago period and 62,000 in the first quarter — which T-Mo attributed to a combination of lower churn, higher gross adds and the introduction of a prepaid high-speed home internet service.
T-Mobile US said that half of its postpaid subscriber base is using a 5G phone, and 5G accounts for 55% of its overall network traffic.
President of Technology Neville Ray said on the quarterly call with analysts that, based on the company’s original estimates that the Sprint merger would allow it to build out 14x the capacity of a standalone T-Mobile, the company is at about the halfway point of that capacity build-out.
Both AT&T and Verizon, on their respective second-quarter calls, reported that they were seeing increases in unpaid customer bills due to inflation and other economic pressures. T-Mobile US execs said that while the operator is watching the overall economic environment carefully, based on their observations, the second quarter of this year is likely to be the high water mark in terms of bad debt for this year.